• Global and domestic credit write-offs, losses and liquidity issues. Global and domestic credit write-offs, losses and liquidity issues could have and have led to an economic downturn and are expected to continue to have a negative impact on already weak economic conditions, continuing the economic downturn and economic conditions, including but not limited to a commercial real estate market downturn, which in turn has led to a decrease in transaction activity and lower values, all of which are expected to continue for the foreseeable future. The current situation in the global credit markets whereby many world governments (including but not limited to the U.S., where the Company transacts virtually all of its business) have had to take unprecedented and uncharted steps to either support the financial institutions in their respective countries from collapse or take direct ownership of same is unprecedented in the Company's history. Write-offs, losses and current restrictions on the availability of capital to the broad market as a whole, both debt and/or equity, have created significant reductions in capital available for commercial real estate and could further reduce the liquidity in and flow of capital to the commercial real estate markets, as is currently the case and is expected to continue for the foreseeable future. These write-offs, losses and restrictions could also cause commercial real estate prices to decrease as is currently the case and is expected to continue for the foreseeable future. In particular, global and domestic write-offs, losses and credit and liquidity issues as well as price declines in the debt and equity markets may reduce the number of acquisitions, dispositions and loan originations, as well as the respective number of transactions and transaction volumes, which

could also adversely affect our capital markets services revenues including our servicing revenue, as is currently the case and is expected to continue for the foreseeable future.

• Decreased investment allocation to commercial real estate class. Allocations to commercial real estate as an asset class for investment portfolio diversification may decrease for a number of reasons beyond our control, including but not limited to poor performance of the asset class relative to other asset classes or superior performance of other asset classes when compared with continued good performance of the commercial real estate asset class, or the poor performance of all assets classes. In addition, while commercial real estate is now viewed as an accepted and valid class for portfolio diversification, if this perception changes, there could be a significant reduction in the amount of debt and equity capital available in the commercial real estate sector. In particular, reductions in debt and/or equity allocations to commercial real estate may reduce the number of acquisitions, dispositions and loan originations, as well as the respective number of transactions and transaction volumes, which could also adversely affect our capital markets services revenues including our servicing revenue, as is currently the case and is expected to continue for the foreseeable future.

• Fluctuations in interest rates. Significant fluctuations in interest rates as well as steady and protracted movements of interest rates in one direction (increases or decreases) could adversely affect the operation and income of commercial real estate properties as well as the demand from investors for commercial real estate investments. Both of these events could adversely affect investor demand and the supply of capital for debt and equity investments in commercial real estate. In particular, increased interest rates may cause prices to decrease due to the increased costs of obtaining financing and could lead to decreases in purchase and sale activities, thereby reducing the amounts of investment sales and loan originations and related servicing fees. If our investment sales origination and servicing businesses are negatively impacted, it is likely that our other lines of business would also suffer due to the relationship among our various capital markets services.

The factors discussed above have affected and continue to be a risk to our business as evidenced by the significant disruptions in the global capital and credit markets, especially in the domestic capital markets. In particular, global and domestic credit and liquidity issues coupled with an economic downturn and recession in many parts of the world economies, especially here in the U.S., have significantly reduced the number of acquisitions, dispositions and loan originations, as well as the respective number of transactions and transaction volumes during 2008 and the first nine months of 2009, and these conditions are likely to continue to reduce the number of transactions and transaction volumes for the foreseeable future. This has had and may continue to have a significant adverse effect on our capital markets services revenues for the foreseeable future. The significant balance sheet issues of many of the CMBS lenders, banks, life insurance companies, captive finance companies and other financial institutions have adversely affected and will likely continue to adversely affect the flow of commercial mortgage debt to the U.S. capital markets and can potentially adversely affect all of our capital markets services platforms and resulting revenues, all of which are expected to continue for the foreseeable future.
The ongoing economic slowdown and/or domestic and global economic recession also continue to be a risk, which is expected to continue for the foreseeable future, not only due to the potential negative adverse impacts on the performance of U.S. commercial real estate markets as these markets tend to lag general economic conditions, but also to the ability of lenders and equity investors, many of whom have experienced significant and unprecedented losses and/or impairments to their portfolios, to generate significant profits and capital to continue to make loans and equity investments in the commercial real estate market, especially in the U.S. where we operate.
Other factors that may adversely affect our business are discussed under the heading "Forward-Looking Statements" and under the caption "Risk Factors" in this Quarterly Report on Form 10-Q.

Results of Operations
Following is a discussion of our results of operations for the three months ended September 30, 2009 and September 30, 2008. The table included in the period comparisons below provides summaries of our results of operations. The period-to-period comparisons of financial results are not necessarily indicative of future results. For a description of the key financial measures and indicators included in our consolidated financial statements, refer to the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Financial Measures and Indicators" in our Annual Report on Form 10-K for the year ended December 31, 2008.

                                          For the Three Months Ended
                                                 September 30,
                                     2009                             2008                     Total             Total
                                             % of                             % of            Dollar           Percentage
                           Dollars         Revenue          Dollars         Revenue           Change             Change
                                                     (dollars in thousands, unless percentages)
Revenues
Capital markets
services revenue           $ 19,483            94.5 %       $ 29,441            94.9 %       $  (9,958 )             (33.8 )%
Interest on mortgage
notes receivable                793             3.8 %            698             2.2 %              95                13.6 %
Other                           336             1.6 %            895             2.9 %            (559 )             (62.5 )%

Total revenues               20,612           100.0 %         31,034           100.0 %         (10,422 )             (33.6 )%
Operating expenses
Cost of services             12,185            59.1 %         20,014            64.5 %          (7,829 )             (39.1 )%
Personnel                     1,425             6.9 %          2,160             7.0 %            (735 )             (34.0 )%
Occupancy                     1,942             9.4 %          1,930             6.2 %              12                 0.6 %
Travel and
entertainment                   566             2.7 %            970             3.1 %            (404 )             (41.6 )%
Supplies, research
and printing                    402             2.0 %          1,523             4.9 %          (1,121 )             (73.6 )%
Other                         3,252            15.8 %          4,535            14.6 %          (1,283 )             (28.3 )%

Total operating
expenses                     19,772            95.9 %         31,132           100.3 %         (11,360 )             (36.5 )%

Operating income /
(loss)                          840             4.1 %            (98 )          (0.3 )%            938                  NM
Interest and other
income, net                     920             4.5 %          1,849             6.0 %            (929 )             (50.2 )%
Interest expense                (51 )          (0.2 )%            (4 )          (0.0 )%            (47 )                NM
Decrease in payable
under tax receivable
agreement                     1,694             8.2 %            282             0.9 %           1,412               500.7 %

Income before income
taxes                         3,403            16.5 %          2,029             6.5 %           1,374                67.7 %
Income tax expense            2,114            10.3 %            369             1.2 %           1,745               472.9 %

Net income                    1,289             6.3 %          1,660             5.3 %            (371 )             (22.3 )%
Net income
attributable to
noncontrolling
interest                      1,328             6.4 %          1,335             4.3 %              (7 )              (0.5 )%

Net (loss) / income
attributable to
controlling interest       $    (39 )          (0.2 )%      $    325             1.0 %       $    (364 )            (112.0 )%

"NM" - Not Meaningful
Revenues. Our total revenues were $20.6 million for the three months ended September 30, 2009 compared to $31.0 million for the same period in 2008, a decrease of $10.4 million, or 33.6%. Revenues decreased primarily as a result of the decrease in production volumes in several of our capital markets services platforms brought about, in significant part, by the unprecedented disruptions, write-offs and credit losses in the global and domestic capital and credit markets coupled with a continuing slowing economy and/or recession, both globally and domestically.
• The revenues we generated from capital markets services for the three months ended September 30, 2009 decreased $10.0 million, or 33.8%, to $19.5 million from $29.4 million for the same period in 2008. The decrease is primarily attributable to a decrease in both the number and the average dollar value of transactions closed during the third quarter of 2009 compared to the third quarter of 2008, brought about in significant part, by the unprecedented disruptions, write-offs and credit losses in the global and domestic capital and credit markets coupled with a continuing slowing economy and/or recession, both globally and domestically.

• The revenues derived from interest on mortgage notes receivable were $0.8 million for the three months ended September 30, 2009 compared to $0.7 million for the same period in 2008, an increase of $0.1 million. Revenues increased primarily as a result of increased volume of Freddie Mac loans in the third quarter of 2009 compared to the third quarter of 2008.

• The other revenues we earned, which consists of expense reimbursements from clients related to out-of-pocket costs incurred, were approximately $0.3 million for the three month period ended September 30, 2009 and $0.9 million for the three month period ending September 30, 2008, a decrease of $0.6 million, or 62.5%. Other revenues decreased primarily as a result of the decrease in production volumes.

Total Operating Expenses. Our total operating expenses were $19.8 million for the three months ended September 30, 2009 compared to $31.1 million for the same period in 2008, a decrease of $11.4 million, or 36.5%. Expenses decreased primarily due to decreased cost of services due to a decrease in capital markets services revenue, decreased personnel costs primarily due to a decrease in revenue and decreased travel and entertainment and supplies, research and printing.
• The costs of services for the three months ended September 30, 2009 decreased $7.8 million, or 39.1%, to $12.2 million from $20.0 million for the same period in 2008. The decrease is primarily the result of the decrease in commissions and other incentive compensation directly related to the decrease in capital markets services revenues. Also contributing to the decrease in cost of services is the impact of our cost saving initiatives, such as reducing headcount and suspending the Company's 401(k) matching contribution. Cost of services as a percentage of capital markets services and other revenues were approximately 61.5% and 66.0% for the three month periods ended September 30, 2009 and September 30, 2008, respectively. This percentage decrease is primarily attributable to our cost savings initiatives, which resulted in a relative decrease of our fixed portion of cost of services, such as salaries for our analysts and fringe benefit costs, that were greater than the relative decrease in our revenue.

• Personnel expenses that are not directly attributable to providing services to our clients for the three months ended September 30, 2009 decreased $0.7 million, or 34.0%, to $1.4 million from $2.2 million for the same period in 2008. The decrease is primarily related to a decrease in profit participation expense resulting from the lower operating income during the three months ended September 30, 2009 and a decrease in salaries due to a lower headcount.

The stock compensation cost, included in personnel expenses, which has been charged against income was $0.3 million and $0.4 million for the three months ended September 30, 2009 and 2008, respectively. At September 30, 2009, there was approximately $0.9 million of unrecognized compensation cost related to share based awards. The weighted average remaining contractual term of the nonvested restricted stock units is 1.9 years as of September 30, 2009. The weighted average remaining contractual term of the nonvested options is 11.3 years as of September 30, 2009.

• Occupancy, travel and entertainment, and supplies, research and printing expenses for the three months ended September 30, 2009 decreased $1.5 million, or 34.2%, to $2.9 million compared to the same period in 2008. These decreases are primarily due to decreased supplies, research and printing and travel and entertainment costs stemming from the decrease in capital markets services revenues and the impact of our cost saving initiatives.

• Other expenses, including costs for insurance, professional fees, depreciation and amortization, interest on our warehouse line of credit and other operating expenses, were $3.3 million in the three months ended September 30, 2009, a decrease of $1.3 million, or 28.3%, versus $4.5 million in the three months ended September 30, 2008. This decrease is primarily related to decreased depreciation and amortization of $0.2 million, decreased marketing and advertising expense of $0.1 million, decreased postage and delivery costs of $0.1 million and a decrease in professional fees of $0.3 million.

Net Income. Our net income for the three months ended September 30, 2009 was $1.3 million, a decrease of $0.4 million versus income of $1.7 million for the same fiscal period in 2008. We attribute this decrease to several factors, with the most significant cause being a decrease of revenues of $10.4 million.
• Interest and other income, net for the three months ended September 30, 2009 was $0.9 million, a decrease of $0.9 million as compared to $1.8 million for the same fiscal period in 2008. This decrease is primarily due to decreased income on mortgage servicing rights of $0.7 million and lower interest income on our cash balances of $0.2 million.

• The interest expense we incurred in the three months ended September 30, 2009 totaled $51,000, an increase of $47,000 from $4,000 of similar expenses incurred in the three months ended September 30, 2008. This increase is primarily due to the recording of the unused commitment fee on the unused amount of credit on our Amended Credit Agreement, which was not recognized in the three months ended September 30, 2008 due to a since corrected recording error.

• Income tax expense was approximately $2.1 million for the three months ended September 30, 2009, as compared to $0.4 million in the three months ended September 30, 2008. This increase is primarily due to the change in rates used to measure the deferred tax assets. During the three months ended September 30, 2009, the Company recorded a current income tax expense of approximately $0.4 million and deferred income tax expense of approximately $1.7 million.

Following is a discussion of our results of operations for the nine months ended September 30, 2009 and September 30, 2008. The table included in the period comparisons below provides summaries of our results of operations. The period-to-period comparisons of financial results are not necessarily indicative of future results. For a description of the key financial measures and indicators included in our consolidated financial statements, refer to the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Financial Measures and Indicators" in our Annual Report on Form 10-K for the year ended December 31, 2008.

                                           For the Nine Months Ended
                                                 September 30,
                                     2009                             2008                      Total             Total
                                             % of                              % of            Dollar           Percentage
                           Dollars         Revenue           Dollars         Revenue           Change             Change
                                                      (dollars in thousands, unless percentages)
Revenues
Capital markets
services revenue           $ 46,381            92.3 %       $ 103,003            96.4 %       $ (56,622 )             (55.0 )%
Interest on mortgage
notes receivable              2,392             4.8 %           1,421             1.3 %             971                68.3 %
Other                         1,500             3.0 %           2,379             2.2 %            (879 )             (36.9 )%

Total revenues               50,273           100.0 %         106,803           100.0 %         (56,530 )             (52.9 )%
Operating expenses
Cost of services             33,069            65.8 %          69,365            64.9 %         (36,296 )             (52.3 )%
Personnel                     4,835             9.6 %           7,018             6.6 %          (2,183 )             (31.1 )%
Occupancy                     5,707            11.4 %           5,689             5.3 %              18                 0.3 %
Travel and
entertainment                 2,053             4.1 %           4,855             4.5 %          (2,802 )             (57.7 )%
Supplies, research
and printing                  1,645             3.3 %           5,841             5.5 %          (4,196 )             (71.8 )%
Other                        10,060            20.0 %          12,245            11.5 %          (2,185 )             (17.8 )%

Total operating
expenses                     57,369           114.1 %         105,013            98.3 %         (47,644 )             (45.4 )%

Operating (loss) /
income                       (7,096 )         (14.1 )%          1,790             1.7 %          (8,886 )            (496.4 )%
Interest and other
income, net                   3,322             6.6 %           3,775             3.5 %            (453 )             (12.0 )%
Interest expense               (373 )          (0.7 )%            (15 )          (0.0 )%           (358 )                NM
Decrease in payable
under the tax
receivable agreement          1,694             3.4 %           3,862             3.6 %          (2,168 )             (56.1 )

(Loss) / income
before income taxes          (2,453 )          (4.9 )%          9,412             8.8 %         (11,865 )            (126.1 )%
Income tax expense            1,073             2.1 %           4,833             4.5 %          (3,760 )             (77.8 )%

Net (loss) / income          (3,526 )          (7.0 )%          4,579             4.3 %          (8,105 )            (177.0 )%
Net (loss) / income
attributable to
noncontrolling
interest                     (1,244 )          (2.5 )%          4,149             3.9 %          (5,393 )            (130.0 )%

Net (loss) / income
attributable to
controlling interest       $ (2,282 )          (4.5 )%      $     430             0.4 %       $  (2,712 )                NM

"NM" - Not Meaningful
Revenues. Our total revenues were $50.3 million for the nine months ended September 30, 2009 compared to $106.8 million for the same period in 2008, a decrease of $56.5 million, or 52.9%. Revenues decreased primarily as a result of the decrease in production volumes in several of our capital markets services platforms brought about, in significant part, by the unprecedented disruptions in the global and domestic capital and credit markets coupled with a slowing economy and/or recession, both globally and domestically.
• The revenues we generated from capital markets services for the nine months ended September 30, 2009 decreased $56.6 million, or 55.0%, to $46.4 million from $103.0 million for the same period in 2008. The decrease is primarily attributable to a decrease in both the number and the average dollar value of transactions closed during the first nine months of 2009 compared to the first nine months of 2008, brought about in significant part, by the unprecedented disruptions in the global and domestic capital and credit

markets coupled with a slowing economy and/or recession, both globally and domestically.

• The revenues derived from interest on mortgage notes receivable were $2.4 million for the nine months ended September 30, 2009 compared to $1.4 million for the same period in 2008, an increase of $1.0 million. Revenues increased primarily as a result of increased volume of Freddie Mac loans in the first nine months of 2009 compared to the first nine months of 2008.

• The other revenues we earned, which consist of expense reimbursements from clients related to out-of-pocket costs incurred, were approximately $1.5 million for the nine month period ended September 30, 2009 and $2.4 million for the nine month period ending September 30, 2008.

Total Operating Expenses. Our total operating expenses were $57.4 million for the nine months ended September 30, 2009 compared to $105.0 million for the same period in 2008, a decrease of $47.6 million, or 45.4%. Expenses decreased primarily due to decreased cost of services and personnel costs as a result of the decrease in capital markets services revenue and our cost savings initiatives, and decreased supplies, research and printing, travel and entertainment, professional fees, postage and delivery costs and marketing and advertising.
• The costs of services for the nine months ended September 30, 2009 decreased $36.3 million, or 52.3%, to $33.1 million from $69.4 million for the same period in 2008. The decrease is primarily the result of the decrease in commissions and other incentive compensation directly related to the decrease in capital markets services revenues. Also contributing to the decrease in cost of services is the impact of our cost saving initiatives, such as reduced headcount and the suspension of the Company's 401(k) matching contribution. . . .